PetSmart acquired by BC PARTNERS & CDPQ - CAISSE DE DEPOT ET PLACEMENT DU QUEBEC

In December 2014, BC Partners announced the completion of its acquisition of PetSmart alongside a consortium including La Caisse de dépôt et placement du Québec and StepStone. The transaction followed a strategic review initiated by PetSmart’s board with the objective of evaluating alternatives capable of maximizing shareholder value. The take-private transaction brought the largest specialty pet retailer in the United States under private-equity ownership, providing BC Partners and its consortium partners with control of a scaled consumer platform operating across the United States, Canada and Puerto Rico. The transaction was structured as a leveraged buyout and valued PetSmart at an enterprise value of $5–15bn. The acquisition price represented a multiple of 5x–12x adjusted EBITDA, with PetSmart generating $500M–1bn of adjusted EBITDA over the relevant twelve-month period. The company had also reported quarterly revenue of $1–10bn, illustrating the scale of the underlying retail operation. The consideration was financed through a combination of equity from the consortium and committed debt financing, while Longview Asset Management, one of PetSmart’s significant shareholders, supported the transaction and retained an interest alongside the acquiring consortium. From BC Partners’ perspective, the investment provided exposure to a large and established specialty retail platform benefiting from the structural growth of the U.S. pet-care market. PetSmart’s extensive store network, established brand recognition, diversified product offering and complementary service activities created opportunities to strengthen customer engagement and develop additional sources of growth. The transaction also gave the investor a platform from which to pursue operational improvements and execute the company’s recently established strategic initiatives outside the constraints of public-market ownership. Following completion, the consortium and PetSmart’s management were expected to focus on expanding the company’s retail and digital proposition, improving customer services and capitalising on continued growth in pet ownership and spending. The transaction therefore represented a major private-equity take-private in the U.S. consumer sector, combining sponsor-backed ownership with an established specialty retail infrastructure and a broad base of pet-care customers.